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Chanel Rosario was supposed to be one of the lucky ones. After
years of sending and re-sending documents, waiting on hold and
attending court hearings to avoid foreclosure on her Staten
Island home, she'd finally received a much-needed reduction on
her mortgage. Eagerly, she and her husband signed it and mailed
it in last September. "We thought it was over."

It wasn't. After months of making payments, Rosario called the
bank handling her mortgage, Chase Home Finance, and found out
Chase was still reporting her as delinquent, damaging her credit
score and putting her home in jeopardy. Despite months of trying
to get an explanation with the help of a legal-aid attorney, she
still doesn't know why Chase isn't abiding by the agreement.

It's a disturbingly common occurrence, say consumer advocates:
Many homeowners have been granted a
hard-fought mortgage modification only to have their mortgage
company effectively pull a bait and switch. The problems range
from homeowners being hit with unexpected extra charges to the
bank simply ignoring the signed agreement.

Handling these types of cases "seems to be our specialty these
days," said Noah Zinner, an attorney with the nonprofit Housing
and Economic Rights Advocates in Oakland, Calif. In addition to
the prospect of losing their homes, homeowners can also see their
access to other credit cut or have their interest rates on their
credit cards jump as a result of being reported delinquent.

To get a sense of how common this problem is, the nonprofit
Connecticut Fair Housing Center conducted an informal survey of
16 legal aid organizations and one private attorney. In nearly a
quarter of the 655 cases of modifications they reviewed, the
mortgage servicer didn't abide by the terms of the agreement. In
the worst cases, homeowners who thought they'd successfully run
the gauntlet of servicer errors and delays found themselves once
again facing foreclosure. Sometimes the house was actually
foreclosed on.

"It's not just one servicer screwing up," said Andrew Neuhauser,
an attorney with Advocates for Basic Legal Equality of Toledo,
Ohio. "It's industry-wide practice."

ProPublica investigated six cases in which banks and other
mortgage servicers offered modifications they didn't abide by. In
some cases, like Rosario's, the bank was accepting new lower
payments but seemed to have no record of the agreement. In
another, accounting mistakes resulted in a buildup of arrears and
late fees. One homeowner was hit with a bill for more than twice
the agreed-upon payment three months into a modification. Another
received a foreclosure notice out of the blue. You can see our
rundown of these cases and the servicer responses
here.

In general, the servicers contacted by ProPublica either
corrected the problems or said they'd work to do so. None
responded to a question about what steps the company was taking
to prevent these sorts of problems.

Attorneys interviewed by ProPublica said that they were usually
successful in getting servicers to correct the problem but that
it often took the threat of litigation. "It certainly seems that
when the servicers have to, they'll fix it," said Zinner, the
legal-aid lawyer from Oakland. That may work for those who can
afford lawyers or find free legal help, but most homeowners
don't have legal representation.

All this has happened on the watch of federal banking regulators,
who only launched an investigation of the servicers' practices
when they became front-page news.

Bryan Hubbard, a spokesman for the Office of the Comptroller of
the Currency (OCC), the primary regulator for the country's
biggest banks, said regulators were aware of the problems and are
putting processes in place to address them. The banks, for
instance, will soon be required to provide a "single
point of contact" for each homeowner, so that when an error
does occur, the homeowner will supposedly be able reach someone
knowledgeable about their case.

The homeowners interviewed by ProPublica often complained of
being unable to get an explanation for why their servicer wasn't
following the signed contract. One had even complained to the OCC
without any results. Inevitably, they found themselves passed
from one servicer employee to another, none of whom seemed to
understand the situation.

"What they did was put blame on me, burden on me to get this
straight when they already knew what the mistake was," said
Carolyn Chaney of Seattle, Wash., after battling with Bank of
America.

As
we've noted, advocates have criticized regulators like the
OCC for their poor track record in identifying servicer abuses
and are skeptical that the new regulations will substantially
improve the experience for homeowners.

In April, regulators ordered
14 of the country's largest banks to make a variety of
changes to their servicing operations and to review their
foreclosure actions over the past couple years. Servicers
violating modification agreements is "among the kinds of issues
that the enforcement actions are intended to address and that the
foreclosure 'look back' review will help quantify," the OCC's
Hubbard said.

Under the foreclosure review, homeowners could be reimbursed for
"impermissible or excessive penalties, fees, or expenses, or
other financial injury suffered," he said, including somehow
compensating the homeowner if there was an improper sale of the
house. As we've reported,
many details of the reviews remain uncertain, including how
much banks will be compensating wronged homeowners.

"The biggest factor in determining an appropriate remedy is to
determine the actual financial harm suffered by the homeowners as
a result of an improper foreclosure action," said Hubbard.

Homeowners seeking redress often face an additional hurdle due to
the servicer not returning their signed copy of the agreement,
said Jeff Gentes of the Connecticut Fair Housing Center. "You're
arguing uphill," he said, if you don't have conclusive proof that
the servicer agreed.

Told of this problem, the OCC's Hubbard said regulators would
consider requiring servicers to return the signed agreements to
homeowners.